Coalition voters underpin surge in confidence

By
Peter Martin

Supporters of the Coalition are suddenly confident about the economy, moving clearly into positive territory for the first time in two years.

SUPPORTERS of the Coalition are suddenly confident about the economy, moving clearly into positive territory for the first time in two years.

The latest Westpac-Melbourne Institute consumer confidence survey shows optimists among Coalition voters outweigh the number of pessimists by five percentage points, a reverse of the recent pattern in which Coalition voters have been strongly negative.

The lift among Coalition voters has been enough to hoist the overall consumer confidence index from around 100 points to 108 on a scale where 100 means the number of pessimists balance the number of optimists.

Westpac senior economist Matthew Hassan said the change was primarily the result of the carbon tax. Ahead of its introduction in the middle of last year it pushed the confidence of Coalition voters (but not Labor voters) into a downward spiral.

''There was the point when there was a whole series of overlapping concerns around tax changes - the carbon tax, the mining tax, the global situation was getting worse and in Queensland things looked dire. The incoming government spoke about Queensland being the Spain of Australia.

''At the same time low- and middle-income households likely to vote Labor were being showered with carbon tax compensation, exacerbating the wedge. In all the time we've been doing this we've never seen as big a deviation. In terms of confidence, we had a divided nation. It was off the charts.''

Mr Hassan said the improved consumer figures represented a return to normality. The carbon tax had not been as bad as expected, the sharemarket had climbed and interest rates had fallen.

HSBC Australia chief economist Paul Bloxham hailed the surge in sentiment as a sign interest rate cuts were having their desired effect. ''This result is consistent with what we've had in mind, which is that the soft patch in the Australian economy may be behind us,'' he said.

Asked whether now was a good time to buy a major household item, an extraordinary 59 per cent of Australians surveyed said yes. Only 16 per cent said no.

One-quarter of those surveyed expected their personal financial situation to improve in the year ahead. Only one in five expected it to get worse.